Aldi and Lidl’s growth being driven by millennials
Millennial-led households are the fastest growing spenders on grocery shopping and are driving the growth of the discounters, according to Nielsen Homescan data.
Although overall grocery spend in Britain is up 2.7% year-on-year, spend among households where a millennial (aged 16-35) is the main shopper grew 7.9% – far ahead of the next fastest-growing spenders, households led by people aged 65+ (up 3%).
The average millennial household with children now spends an extra £210 annually on groceries, while millennial households without kids spend £113 extra.
“Millennials are freeing up more income to spend on groceries,” said Mike Watkins, Nielsen’s UK head of retailer and business insight. “This is mainly due to millennials shopping more frequently and continuing to buy more per trip. This is down to the increasing number of local store formats which suit their ‘top-up’ lifestyle – and can include spending more on food consumed outside the home – much more than the big weekly trip to a large out-of-town store.”
Historically, Asda’s had the strongest appeal with millennials – especially millennial families who allocate 17.1% of their grocery spend to Asda, compared to just 11.4% among the total population.
However, Nielsen said that millennials are increasingly allocating spend to the discounters and bargain stores. Millennial spend at Aldi increased a huge 46% year-on-year – compared to a 19% increase across all Aldi shoppers. Millennial spend at Lidl rose 28% – nearly twice the rate across all shoppers (15%).
“Although millennials, particularly families, have historically over-indexed on shopping at Asda, they’re now really driving the growth of the discounters,” said Watkins. “However, it’s important not to think of millennials as one homogenous group, for example, they’ve also increased spend dramatically at M&S which has a large price difference to the discounters due a different product assortment.”
Although London contains the most millennials, due to the sheer size of the city, the north of England has the highest proportion of them. This is led by Yorkshire where there are more than twice as many millennial households than in other parts of Britain.
Nielsen said that Aldi has been much more successful at gaining the millennial pound in the north, capitalising on its stronger presence in locations where millennials live. However, Aldi under-performs in London compared to Lidl due to having far fewer stores in millennial catchment areas. Despite Lidl’s better performance in London, its overall success is also being driven by regions less populated with millennials, such as Wales and the South West.
“The media, retailers and marketers tend to have a picture of millennials as London-based hipsters shopping at wholefoods,” observed Watkins. “However, they’re driving growth at Asda and the discounters and have an overly strong presence in the north. Retailers need to look beyond labels and understand actual behaviour if they want to appeal to this crucial group more successfully.”